Quanex Building Products Announces Third Quarter 2021 Results and Reaffirms Full Year 2021 Guidance

Rhea-AI Summary

Quanex Building Products Corporation (NYSE:NX) reported impressive Q3 2021 results with net sales of $279.9 million, up 32% year-over-year, driven by increased demand across all product lines. Gross margin decreased to 21.4% from 23.4% due to inflation and supply chain challenges. The net income rose to $13.6 million with diluted EPS at $0.41. The company strengthened its balance sheet, repaying $15 million in debt and maintaining liquidity of $306.2 million. For fiscal 2021, Quanex reaffirms sales guidance of $1.04 billion to $1.06 billion.

Positive

• Net sales increased by 32% year-over-year to $279.9 million.
• Net income rose to $13.6 million with diluted EPS of $0.41.
• Strengthened balance sheet and liquidity increased to $306.2 million.
• Successfully repaid $15 million in bank debt.
• Positive sales growth across all operating segments.

Negative

• Gross margin decreased to 21.4% from 23.4% due to inflation and supply chain challenges.
• Ongoing impacts from inflation, labor costs, and supply chain issues expected to pressure margins.

Solid Net Sales Growth Realized Across All Operating Segments 
Strong Balance Sheet 
Liquidity Continues to Increase 
Repaid $15 Million of Bank Debt

HOUSTON, Sept. 02, 2021 (GLOBE NEWSWIRE) -- Quanex Building Products Corporation (NYSE:NX) (“Quanex” or the “Company”) today announced its results for the three months ended July 31, 2021.

The Company reported the following selected financial results:

QUANEX BUILDING PRODUCTS CORPORATION
Q3 2021 Earnings Release
			Three Months Ended July 31,				Nine Months Ended July 31,
($ in millions, except per share data)			2021		2020		2021		2020
Net Sales			$279.9		$212.1		$780.4		$596.2
Gross Margin			$60.0		$49.7		$175.7		$126.6
Gross Margin %			21.4%		23.4%		22.5%		21.2%
Net Income			$13.6		$10.8		$36.0		$16.3
Diluted EPS			$0.41		$0.33		$1.08		$0.50
Adjusted Net Income			$14.2		$11.1		$37.8		$18.7
Adjusted Diluted EPS			$0.42		$0.34		$1.13		$0.57
Adjusted EBITDA			$32.9		$27.7		$89.5		$65.2
Adjusted EBITDA Margin %			11.8%		13.1%		11.5%		10.9%
Cash Provided by Operating Activities			$18.5		$45.1		$47.4		$47.6
Free Cash Flow			$12.3		$40.7		$31.4		$26.9

(See Non-GAAP Terminology Definitions and Disclaimers section, Non-GAAP Financial Measure Disclosure table, Selected Segment Data table and Free Cash Flow Reconciliation table for additional information)

George Wilson, President and Chief Executive Officer, stated, “Demand for our products remained robust across all of our product lines throughout the third quarter of 2021.   On a consolidated basis, net sales increased by approximately 32% year-over-year as compared to the third quarter of 2020. General inflation, time lag for index pricing, supply chain challenges and labor constraints all continue to have a negative impact on margins.   In addition, our plant in Germany was down for approximately 14 days during the quarter due to flooding in Europe, but the plant was back up and running at full capacity by the end of July. Our balance sheet continues to strengthen, and we were able to repay $15.0 million in bank debt during the quarter while also repurchasing approximately $1.8 million of our common stock. We will remain focused on generating cash and paying down debt in the near-term.”   (See Non-GAAP Terminology Definitions and Disclaimers section for additional information)

Third Quarter 2021 Results Summary   

The Company reported net sales of $279.9 million during the three months ended July 31, 2021, which represents growth of 32.0% compared to $212.1 million for the same period of 2020. The increase was largely due to increased demand across all product lines and operating segments combined with increased pricing mostly related to the pass through of raw material cost inflation. In detail, Quanex posted net sales growth of 20.8% in its North American Fenestration segment, 19.3% in its North American Cabinet Components segment and 85.8% in its European Fenestration segment, excluding the foreign exchange impact and despite the challenges presented by flooding in Germany as previously noted. As a reminder, both of Quanex’s manufacturing facilities in the U.K. were shut down in late March of 2020 and did not resume operations until mid-to-late May 2020. (See Sales Analysis table for additional information)

The increase in earnings for the third quarter of 2021 was mainly due to higher volumes and improved operating leverage. This increase was somewhat offset by inflationary pressures and an increase in selling, general and administrative expenses, which was mostly attributable to more normalized medical costs combined with an increase in stock-based compensation expense.  

Balance Sheet & Liquidity Update

As of July 31, 2021, Quanex had total debt of $74.0 million and its leverage ratio of Net Debt to LTM Adjusted EBITDA improved to 0.2x.   (See Non-GAAP Terminology Definitions and Disclaimers section and Net Debt and LTM Adjusted EBITDA reconciliation tables for additional information)

The Company’s liquidity increased to $306.2 million as of July 31, 2021, consisting of $43.7 million in cash on hand plus availability under its Senior Secured Revolving Credit Facility due 2023, less letters of credit outstanding.

Share Repurchases

Quanex’s Board of Directors authorized a $60 million share repurchase program in September of 2018. Repurchases under this program will be made in open market transactions or privately negotiated transactions, subject to market conditions, applicable legal requirements, and other relevant factors. The program does not have an expiration date or a limit on the number of shares that may be repurchased.   The Company repurchased 74,257 shares of common stock for approximately $1.8 million at an average price of $23.88 per share during the three months ended July 31, 2021. As of July 31, 2021, approximately $5.4 million remained under the existing share repurchase authorization.   

Outlook        

George Wilson, President and Chief Executive Officer, commented, “While we remain optimistic on the demand outlook for our products, we do expect inflation, labor costs, and supply chain challenges to continue pressuring margins throughout the fourth quarter of this year. We continue to pass these incremental costs along to our customers through indexes, surcharges, and price increases; however, there are time lags in each case.   With this backdrop, on a consolidated basis, we are reaffirming net sales guidance of approximately $1.04 billion to $1.06 billion and Adjusted EBITDA* of $125 million to $130 million in fiscal 2021.”

*When Quanex provides expectations for Adjusted EBITDA on a forward-looking basis, a reconciliation of the differences between the non-GAAP expectations and corresponding GAAP measures is generally not available without unreasonable effort. Certain items required for such a reconciliation are outside of the Company’s control and/or cannot be reasonably predicted or estimated, such as the provision for income taxes.

Conference Call and Webcast Information

The Company has scheduled a conference call for Friday, September 3, 2021, at 11:00 a.m. ET (10:00 a.m. CT). To participate in the conference call dial (877) 388-2139 for domestic callers and (541) 797-2983 for international callers, in both cases using the conference passcode 6642169, and ask for the Quanex call a few minutes prior to the start time. A link to the live audio webcast will also be available on the Company’s website at http://www.quanex.com in the Investors section under Presentations & Events. A telephonic replay of the call will be available approximately two hours after the live broadcast ends and will be accessible through September 10, 2021. To access the replay dial (855) 859-2056 for domestic callers and (404) 537-3406 for international callers, in both cases referencing conference passcode 6642169.  

About Quanex

Quanex Building Products Corporation is an industry-leading manufacturer of components sold to Original Equipment Manufacturers (OEMs) in the building products industry.  Quanex designs and produces energy-efficient fenestration products in addition to kitchen and bath cabinet components.   For more information contact Scott Zuehlke, Senior Vice President, Chief Financial Officer & Treasurer, at 713-877-5327 or scott.zuehlke@quanex.com.

Non-GAAP Terminology Definitions and Disclaimers

Adjusted Net Income (defined as net income further adjusted to exclude purchase price accounting inventory step-ups, transaction costs, certain severance charges, gain/loss on the sale of certain fixed assets, restructuring charges, asset impairment charges, other net adjustments related to foreign currency transaction gain/loss and effective tax rates reflecting impacts of adjustments on a with and without basis) and Adjusted EPS are non-GAAP financial measures that Quanex believes provide a consistent basis for comparison between periods and more accurately reflects operational performance, as they are not influenced by certain income or expense items not affecting ongoing operations. EBITDA (defined as net income or loss before interest, taxes, depreciation and amortization and other, net) and Adjusted EBITDA (defined as EBITDA further adjusted to exclude purchase price accounting inventory step-ups, transaction costs, certain severance charges, gain/loss on the sale of certain fixed assets, restructuring charges and asset impairment charges) are non-GAAP financial measures that the Company uses to measure operational performance and assist with financial decision-making.  Net Debt is defined as total debt (outstanding balance on the revolving credit facility plus financial lease obligations) less cash and cash equivalents. The leverage ratio of Net Debt to LTM Adjusted EBITDA is a financial measure that the Company believes is useful to investors and financial analysts in evaluating Quanex’s leverage.   In addition, with certain limited adjustments, this leverage ratio is the basis for a key covenant in the Company’s credit agreement. Free Cash Flow is a non-GAAP measure calculated using cash provided by operating activities less capital expenditures.   Free Cash Flow is measured before application of certain contractual commitments (including capital lease obligations), and accordingly is not a true measure of Quanex’s residual cash flow available for discretionary expenditures. The Company believes that the presented non-GAAP measures provide a consistent basis for comparison between periods and will assist investors in understanding Quanex’s financial performance when comparing results to other investment opportunities.  The presented non-GAAP measures may not be the same as those used by other companies. The Company does not intend for this information to be considered in isolation or as a substitute for other measures prepared in accordance with U.S. GAAP.  

Forward Looking Statements

Statements that use the words “estimated,” “expect,” “could,” “should,” “believe,” “will,” “might,” or similar words reflecting future expectations or beliefs are forward-looking statements. The forward-looking statements include, but are not limited to, the following: impacts from public health issues (including pandemics, such as the recent COVID-19 pandemic) on the economy and the demand for Quanex’s products, the Company’s future operating results, future financial condition, future uses of cash and other expenditures, expenses and tax rates, expectations relating to Quanex’s industry, and the Company’s future growth, including any guidance discussed in this press release. The statements and guidance set forth in this release are based on current expectations.   Actual results or events may differ materially from this release.   For a complete discussion of factors that may affect Quanex’s future performance, please refer to the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2020, and the Company’s Quarterly Reports on Form 10-Q under the sections entitled “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors”. Any forward-looking statements in this press release are made as of the date hereof, and Quanex undertakes no obligation to update or revise any forward-looking statements to reflect new information or events.

QUANEX BUILDING PRODUCTS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)

		Three Months Ended July 31,								Nine Months Ended July 31,
			2021				2020				2021				2020
Net sales		$	279,877			$	212,096			$	780,381			$	596,168
Cost of sales			219,866				162,427				604,723				469,586
Selling, general and administrative			27,766				21,973				88,299				62,818
Restructuring charges			-				73				39				477
Depreciation and amortization			10,683				11,060				32,543				35,851
Operating income			21,562				16,563				54,777				27,436
Interest expense			(597	)			(1,165	)			(1,988	)			(4,310	)
Other, net			188				(220	)			645				116
Income before income taxes			21,153				15,178				53,434				23,242
Income tax expense			(7,474	)			(4,345	)			(17,352	)			(6,898	)
Net income		$	13,679			$	10,833			$	36,082			$	16,344
Earnings per common share, basic		$	0.41			$	0.33			$	1.09			$	0.50
Earnings per common share, diluted		$	0.41			$	0.33			$	1.08			$	0.50
Weighted average common shares outstanding:
Basic			33,359				32,610				33,194				32,716
Diluted			33,650				32,739				33,518				32,845
Cash dividends per share		$	0.08			$	0.08			$	0.24			$	0.24

QUANEX BUILDING PRODUCTS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)

		July 31, 2021				October 31, 2020
ASSETS
Current assets:
Cash and cash equivalents		$	43,663			$	51,621
Accounts receivable, net			98,286				88,287
Inventories, net			93,493				61,181
Prepaid and other current assets			9,133				6,217
Total current assets			244,575				207,306
Property, plant and equipment, net			176,032				184,104
Operating lease right-of-use assets			54,811				51,824
Goodwill			150,487				146,154
Intangible assets, net			86,026				93,068
Other assets			7,261				9,129
Total assets		$	719,192			$	691,585
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	79,167			$	77,335
Accrued liabilities			52,751				38,289
Income taxes payable			1,327				6,465
Current maturities of long-term debt			839				692
Current operating lease liabilities			8,270				7,459
Total current liabilities			142,354				130,240
Long-term debt			72,439				116,728
Noncurrent operating lease liabilities			47,371				44,873
Deferred pension and postretirement benefits			10,765				10,923
Deferred income taxes			25,252				19,116
Other liabilities			15,622				13,946
Total liabilities			313,803				335,826
Stockholders’ equity:
Common stock			373				373
Additional paid-in-capital			253,662				253,458
Retained earnings			241,582				213,517
Accumulated other comprehensive loss			(22,968	)			(33,024	)
Treasury stock at cost			(67,260	)			(78,565	)
Total stockholders’ equity			405,389				355,759
Total liabilities and stockholders' equity		$	719,192			$	691,585

QUANEX BUILDING PRODUCTS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands)
(Unaudited)

	Nine Months Ended July 31,
		2021				2020
Operating activities:
Net income	$	36,082			$	16,344
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		32,543				35,851
Stock-based compensation		1,470				513
Deferred income tax		5,429				438
Other, net		5,485				762
Changes in assets and liabilities:
Increase in accounts receivable		(8,277	)			(1,852	)
(Increase) decrease in inventory		(32,113	)			3,553
(Increase) decrease in other current assets		(2,768	)			1,218
Increase (decrease) in accounts payable		1,600				(1,878	)
Increase (decrease) in accrued liabilities		12,521				(7,611	)
(Decrease) increase in income taxes payable		(5,158	)			107
(Decrease) increase in deferred pension and postretirement benefits		(158	)			573
Increase (decrease) in other long-term liabilities		962				(181	)
Other, net		(183	)			(276	)
Cash provided by operating activities		47,435				47,561
Investing activities:
Capital expenditures		(16,006	)			(20,673	)
Proceeds from disposition of capital assets		3,138				131
Cash used for investing activities		(12,868	)			(20,542	)
Financing activities:
Borrowings under credit facilities		-				114,500
Repayments of credit facility borrowings		(45,000	)			(119,000	)
Repayments of other long-term debt		(502	)			(791	)
Common stock dividends paid		(8,017	)			(7,910	)
Issuance of common stock		16,272				2,954
Payroll tax paid to settle shares forfeited upon vesting of stock		(492	)			(454	)
Purchase of treasury stock		(5,741	)			(6,693	)
Cash used for financing activities		(43,480	)			(17,394	)
Effect of exchange rate changes on cash and cash equivalents		955				580
(Decrease) increase in cash and cash equivalents		(7,958	)			10,205
Cash and cash equivalents at beginning of period		51,621				30,868
Cash and cash equivalents at end of period	$	43,663			$	41,073

QUANEX BUILDING PRODUCTS CORPORATION
FREE CASH FLOW AND NET DEBT RECONCILIATIONS
(In thousands)
(Unaudited)

The following table reconciles the Company's calculation of Free Cash Flow, a non-GAAP measure, to its most directly comparable GAAP measure. The Company defines Free Cash Flow as cash provided by operating activities less capital expenditures.
			Three Months Ended July 31,								Nine Months Ended July 31,
				2021				2020				2021				2020
Cash provided by operating activities				18,475			$45,089				$47,435				$47,561
Capital expenditures				(6,207)				(4,360)				(16,006)				(20,673)
Free Cash Flow			$12,268				$40,729				$31,429				$26,888
The following table reconciles the Company's Net Debt which is defined as total debt principal of the Company plus finance lease obligations minus cash.
			As of July 31,
				2021				2020
Revolving Credit Facility			$58,000				$138,000
Finance Lease Obligations				15,951				15,729
Total Debt (1)				73,951				153,729
Less: Cash and cash equivalents				43,663				41,073
Net Debt			$30,288				$112,656
(1) Excludes outstanding letters of credit.

QUANEX BUILDING PRODUCTS CORPORATION
NON-GAAP FINANCIAL MEASURE DISCLOSURE
(In thousands, except per share data)
(Unaudited)

		Three Months Ended									Three Months Ended									Nine Months Ended									Nine Months Ended
Reconciliation of Adjusted Net Income and Adjusted EPS		July 31, 2021									July 31, 2020									July 31, 2021									July 31, 2020
		Net Income				Diluted EPS					Net Income				Diluted EPS					Net Income				Diluted EPS					Net Loss				Diluted EPS
Net income as reported		$	13,679			$	0.41				$	10,833			$	0.33				$	36,082			$	1.08				$	16,344			$	0.50
Net Income reconciling items from below			512				0.01					280				0.01					1,686				0.05					2,387				0.07
Adjusted net income and adjusted EPS		$	14,191			$	0.42				$	11,113			$	0.34				$	37,768			$	1.13				$	18,731			$	0.57
Reconciliation of Adjusted EBITDA		Three Months Ended July 31, 2021									Three Months Ended July 31, 2020									Nine Months Ended July 31, 2021									Nine Months Ended July 31, 2020
		Reconciliation									Reconciliation									Reconciliation									Reconciliation
Net income as reported		$	13,679								$	10,833								$	36,082								$	16,344
Income tax expense			7,474									4,345									17,352									6,898
Other, net			(188	)								220									(645	)								(116	)
Interest expense			597									1,165									1,988									4,310
Depreciation and amortization			10,683									11,060									32,543									35,851
EBITDA			32,245									27,623									87,320									63,287
EBITDA reconciling items from below			682									73									2,160									1,875
Adjusted EBITDA		$	32,927								$	27,696								$	89,480								$	65,162
Reconciling Items		Three Months Ended July 31, 2021									Three Months Ended July 31, 2020									Nine Months Ended July 31, 2021									Nine Months Ended July 31, 2020
		Income Statement				Reconciling Items					Income Statement				Reconciling Items					Income Statement				Reconciling Items					Income Statement				Reconciling Items
Net sales		$	279,877			$	-				$	212,096			$	-				$	780,381			$	-				$	596,168			$	-
Cost of sales			219,866				(307	)	(1	)		162,427				-					604,723				(307	)	(1	)		469,586				-
Selling, general and administrative			27,766				(375	)	(2	)		21,973				-					88,299				(1,814	)	(2	)		62,818				(1,398	)	(2	)
Restructuring charges			-				-					73				(73	)	(3	)		39				(39	)	(3	)		477				(477	)	(3	)
EBITDA			32,245				682					27,623				73					87,320				2,160					63,287				1,875
Depreciation and amortization			10,683				-					11,060				-					32,543				-					35,851				(968	)	(4	)
Operating income			21,562				682					16,563				73					54,777				2,160					27,436				2,843
Interest expense			(597	)			-					(1,165	)			-					(1,988	)			-					(4,310	)			-
Other, net			188				79		(5	)		(220	)			458		(5	)		645				161		(5	)		116				390		(5	)
Income before income taxes			21,153				761					15,178				531					53,434				2,321					23,242				3,233
Income tax expense			(7,474	)			(249	)	(6	)		(4,345	)			(251	)	(6	)		(17,352	)			(635	)	(6	)		(6,898	)			(846	)	(6	)
Net income		$	13,679			$	512				$	10,833			$	280				$	36,082			$	1,686				$	16,344			$	2,387
Diluted earnings per share		$	0.41								$	0.33								$	1.08								$	0.50
(1) Loss on damage to a plant caused by flooding of $0.3 million for the three and nine months ended July 31, 2021.
(2) Transaction and advisory fees, $0.4 million related to the loss on a sale of a plant in the three months ended July 31, 2021, $1.8 million related to the loss on a sale of a plant in the nine months ended July 31, 2021, $1.3 million related to executive severance charges in the nine months ended July 31, 2020, respectively.
(3) Restructuring charges related to the closure of manufacturing plant facilities.
(4) Accelerated depreciation related to the closure of a North American Cabinet Components plant.
(5) Foreign currency transaction losses.
(6) Impact on a with and without basis.

QUANEX BUILDING PRODUCTS CORPORATION
NON-GAAP FINANCIAL MEASURE DISCLOSURE
(In thousands)
(Unaudited)

Reconciliation of Last Twelve Months Adjusted EBITDA		Three Months Ended July 31, 2021				Three Months Ended April 30, 2021				Three Months Ended January 31, 2021				Three Months Ended October 31, 2020				Total
		Reconciliation				Reconciliation				Reconciliation				Reconciliation				Reconciliation
Net income as reported		$	13,679			$	14,551			$	7,852			$	22,152			$	58,234
Income tax expense			7,474				6,454				3,424				4,906				22,258
Other, net			(188	)			(265	)			(192	)			(164	)			(809	)
Interest expense			597				640				751				935				2,923
Depreciation and amortization			10,683				10,845				11,015				11,378				43,921
EBITDA			32,245				32,225				22,850				39,207				126,527
Cost of sales (1)			307				-				-				-				307
Selling, general and administrative (2)			375				-				1,439				-				1,814
Restructuring charges (3)			-				-				39				145				184
Adjusted EBITDA		$	32,927			$	32,225			$	24,328			$	39,352			$	128,832
(1) Loss on the damage of a plant caused by flooding.
(2) Transaction and advisory fees, loss on the sale of a plant, and executive severance charges.
(3) Restructuring charges relate to the closure of manufacturing plant facilities.

QUANEX BUILDING PRODUCTS CORPORATION
SELECTED SEGMENT DATA
(In thousands)
(Unaudited)

This table provides gross margin, operating (loss) income, EBITDA, and Adjusted EBITDA by reportable segment. Non-operating expense and income tax expense are not allocated to the reportable segments.
		NA Fenestration				EU Fenestration				NA Cabinet Components				Unallocated Corp & Other				Total
Three months ended July 31, 2021
Net sales		$	147,818			$	71,114			$	61,936			$	(991	)		$	279,877
Cost of sales			116,517				49,479				54,334				(464	)			219,866
Gross Margin			31,301				21,635				7,602				(527	)			60,011
Gross Margin %			21.2%				30.4%				12.3%								21.4%
Selling, general and administrative			13,428				7,525				5,130				1,683				27,766
Depreciation and amortization			4,571				2,646				3,390				76				10,683
Operating income (loss)			13,302				11,464				(918	)			(2,286	)			21,562
Depreciation and amortization			4,571				2,646				3,390				76				10,683
EBITDA			17,873				14,110				2,472				(2,210	)			32,245
Loss on the damage of a plant			-				307				-				-				307
Loss on sale of plant			375				-				-				-				375
Adjusted EBITDA		$	18,248			$	14,417			$	2,472			$	(2,210	)		$	32,927
Adjusted EBITDA Margin %			12.3%				20.3%				4.0%								11.8%
Three months ended July 31, 2020
Net sales		$	122,386			$	38,265			$	51,925			$	(480	)		$	212,096
Cost of sales			92,639				25,845				44,218				(275	)			162,427
Gross Margin			29,747				12,420				7,707				(205	)			49,669
Gross Margin %			24.3%				32.5%				14.8%								23.4%
Selling, general and administrative			11,922				4,748				4,634				669				21,973
Restructuring charges			71				-				2				-				73
Depreciation and amortization			5,371				2,307				3,264				118				11,060
Operating income (loss)			12,383				5,365				(193	)			(992	)			16,563
Depreciation and amortization			5,371				2,307				3,264				118				11,060
EBITDA			17,754				7,672				3,071				(874	)			27,623
Restructuring charges			71				-				2				-				73
Adjusted EBITDA		$	17,825			$	7,672			$	3,073			$	(874	)		$	27,696
Adjusted EBITDA Margin %			14.6%				20.0%				5.9%								13.1%
Nine months ended July 31, 2021
Net sales		$	422,077			$	181,862			$	179,492			$	(3,050	)		$	780,381
Cost of sales			328,278				122,631				155,370				(1,556	)			604,723
Gross Margin			93,799				59,231				24,122				(1,494	)			175,658
Gross Margin %			22.2%				32.6%				13.4%								22.5%
Selling, general and administrative			38,944				21,559				15,372				12,424				88,299
Restructuring charges			39				-				-				-				39
Depreciation and amortization			14,528				7,771				9,965				279				32,543
Operating income (loss)			40,288				29,901				(1,215	)			(14,197	)			54,777
Depreciation and amortization			14,528				7,771				9,965				279				32,543
EBITDA			54,816				37,672				8,750				(13,918	)			87,320
Loss on the damage of a plant			-				307				-				-				307
Loss on sale of plant			375				-				-				1,439				1,814
Restructuring charges			39				-				-				-				39
Adjusted EBITDA		$	55,230			$	37,979			$	8,750			$	(12,479	)		$	89,480
Adjusted EBITDA Margin %			13.1%				20.9%				4.9%								11.5%
Nine months ended July 31, 2020
Net sales		$	341,432			$	104,230			$	152,634			$	(2,128	)		$	596,168
Cost of sales			266,489				72,055				132,259				(1,217	)			469,586
Gross Margin			74,943				32,175				20,375				(911	)			126,582
Gross Margin %			21.9%				30.9%				13.3%								21.2%
Selling, general and administrative			34,962				15,990				13,468				(1,602	)			62,818
Restructuring charges			228				-				249				-				477
Depreciation and amortization			18,311				7,045				10,139				356				35,851
Operating income (loss)			21,442				9,140				(3,481	)			335				27,436
Depreciation and amortization			18,311				7,045				10,139				356				35,851
EBITDA			39,753				16,185				6,658				691				63,287
Transaction and advisory fees			-				-				-				55				55
Executive severance charges			-				-				-				1,343				1,343
Restructuring charges			228				-				249				-				477
Adjusted EBITDA		$	39,981			$	16,185			$	6,907			$	2,089			$	65,162
Adjusted EBITDA Margin %			11.7%				15.5%				4.5%								10.9%

QUANEX BUILDING PRODUCTS CORPORATION
SALES ANALYSIS
(In thousands)
(Unaudited)

		Three Months Ended								Nine Months Ended
		July 31, 2021				July 31, 2020				July 31, 2021				July 31, 2020
NA Fenestration:
	United States - fenestration	$	129,291			$	109,455			$	369,809			$	302,094
	International - fenestration		9,581				6,696				25,756				19,284
	United States - non-fenestration		5,853				4,845				17,543				13,779
	International - non-fenestration		3,093				1,390				8,969				6,275
		$	147,818			$	122,386			$	422,077			$	341,432
EU Fenestration (1):
	International - fenestration	$	54,883			$	31,904			$	147,072			$	87,732
	International - non-fenestration		16,231				6,361				34,790				16,498
		$	71,114			$	38,265			$	181,862			$	104,230
NA Cabinet Components:
	United States - fenestration	$	3,240			$	2,666			$	9,711			$	8,461
	United States - non-fenestration		57,418				48,849				168,308				142,838
	International - non-fenestration		1,278				410				1,473				1,335
		$	61,936			$	51,925			$	179,492			$	152,634
Unallocated Corporate & Other:
	Eliminations	$	(991	)		$	(480	)		$	(3,050	)		$	(2,128	)
		$	(991	)		$	(480	)		$	(3,050	)		$	(2,128	)
Net Sales		$	279,877			$	212,096			$	780,381			$	596,168
(1) Reflects increase of $4.1 million and $8.6 million in revenue associated with foreign currency exchange rate impacts for the three and nine months ended July 31, 2021, respectively.

FAQ

What were Quanex's net sales for Q3 2021?

Quanex reported net sales of $279.9 million for Q3 2021.

How much did Quanex's net income increase in Q3 2021?

Net income for Q3 2021 increased to $13.6 million.

What is the outlook for Quanex's sales in fiscal 2021?

Quanex reaffirmed its sales guidance of approximately $1.04 billion to $1.06 billion for fiscal 2021.

What challenges is Quanex facing regarding margins?

Quanex is facing ongoing challenges from inflation, labor costs, and supply chain issues, which are expected to pressure margins.

How much bank debt has Quanex repaid recently?

Quanex repaid $15 million of its bank debt during Q3 2021.